IPO Report: Wayne Farms (WNFM)

Francis Gaskins |

Wayne Farms (WNFM) is the sixth largest integrated producer and processor of broiler chickens in the United States. It is based in Oakwood, GA.

Twelve other companies are scheduled for the week of June 22. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Citigroup, J.P. Morgan, BMO Capital Markets
Co-managers: Stephens, Wells Fargo Securities, BB&T Capital Markets, Rabo Securities

End of lockup (180 days): Tuesday, December 22, 2015
End of 40-day quiet period: Tuesday, August 4, 2015

WNFM scheduled a $244 million IPO with a market capitalization of $1.01 million at a price range midpoint of $19 for Thursday, June 25, 2015 on Nasdaq.

Summary

Following a series of targeted acquisitions, combined with organic growth, WNFM is currently the sixth largest integrated producer and processor of broiler chickens in the United States.

WNFM is primarily engaged in the production and processing of fresh and prepared foods chicken products to retailers, distributors and foodservice operators.

Valuation
Glossary

Per share dilution

.

.

-$14.09

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Wayne Farms (WNFM)

$1,043

0.5

4.9

3.5

3.6

23%

             

Conclusion

Neutral

Worst Avian Flu Outbreak in U.S. History, this yr

Q1 rev +7%

19% gross profit

10% net income

P/E 4.9

Price to sales of .5

Spin-off from  Continental Grain

1.15% anticipated payout on class A stock

Business

Following a series of targeted acquisitions, combined with organic growth, WNFM is currently the sixth largest integrated producer and processor of broiler chickens in the United States.

WNFM is primarily engaged in the production and processing of fresh and prepared foods chicken products to retailers, distributors and foodservice operators.

Avian Flu

Worst Avian Flu Outbreak in U.S. History, this year.  If WNFM poultry products become contaminated, WNFMwe may be subject to product liability claims and product recalls.

Products

WNFM offers fresh as well as deboned, value-added marinated, breaded, cooked and individually frozen products to its customers through strong national and international distribution channels.

Size

WNFM employs approximately 9,000 people and have the capacity to process more than 6.5 million birds per week for a total of more than 2.7 billion pounds of live chicken annually.

In the fiscal year ended March 28, 2015, WNFM generated $2.2 billion in total revenue compared to $2.1 billion in the fiscal year ended March 29, 2014, representing a 7.4% year-over-year increase, and produced approximately 2.4 billion pounds of chicken products, a 5.2% increase over the fiscal year ended March 29, 2014.

WNFM markets its diversified portfolio of fresh and prepared foods chicken products to a diverse set of customers across the United States and in 29 other countries.

WNFM has become a valuable partner to its customers and a recognized industry leader by consistently providing high-quality products and services designed to meet their needs and enhance their respective businesses.

Sales

WNFM’s sales efforts are largely targeted towards the business-to-business industry and selling to some of the largest chain restaurant, industrial, fresh meat distributor, institutional and regional foodservice distribution companies in the country, including, among others, Chick-fil-A, Nestlé SA, Boar’s Head Provisions and Costco Wholesale Corporation.

Intellectual Property

WNFM has registered with the United States Patent and Trademark Office the trademarks Wayne Farms®, Platinum Harvest®, Dutch Quality House® and Chef’s Craft™, and corresponding logos. WNFM’s branded products include fresh chicken products targeted for both foodservice and distributor applications while Platinum Harvest® is WNFM’s premier line of hand-selected and hand-deboned poultry targeted for foodservice distributors and value-driven end users.

WNFM uses the Dutch Quality House® name in connection of its brand of value added products that are used in the nation’s largest restaurant chains, by some of the country’s largest institutional food manufacturers, and in individually owned restaurants throughout the nation.

Both the Dutch Quality House® and Platinum Harvest® brand names are also used in conjunction with WNFM’s prepared foods, frozen, ready-to-cook and ready-to-eat products.

Chef’s Craft™ is used in conjunction with WNFM’s newly introduced prepared foods, chilled (refrigerated) and ready-to-eat products. Chef’s Craft™ products are and will be sold primarily in the foodservice and club channels.

WNFM has also registered with the United States Patent and Trademark Office 19 other trademarks that are used in connection with the distribution of chicken and other products and for other competitive purposes.

Competition

In the United States, WNFM competes principally with other vertically integrated broiler companies, but its broiler products compete with all meat proteins and fish, because changes in the relative prices of these foods may alter consumer buying patterns.

In general, the competitive factors in the U.S. poultry industry include price, product quality, product development, brand identification, breadth of product line and customer service.

Competitive factors vary by major market. In the foodservice market, WNFM believes that competition is based on consistent quality, product development, service and price.

In the U.S. retail market, WNFM believes that product quality, brand awareness and customer service are the primary bases of competition.

In addition WNFM competes with non-vertically integrated further processors in the U.S. prepared food business.

However, WNFM believes that it has significant, long-term cost and quality advantages over non-vertically integrated prepared food processors. Additionally, WNFM faces competition for export sales from both domestic and foreign suppliers.

5% Shareholders Pre-IPO

Continental Grain Company  76%

Paul Fribourg  76.0%

Dividends

WNFM intends to pay a quarterly cash dividend initially equal to $0.056 per share of Class A common stock, commencing on September 1, 2015.

Use of Proceeds

WNFM expects to receive $234 million from its IPO and use it for the following:

to Wayne Farms LLC in exchange for a number of Class A Units equal to the number of shares of its Class A common stock sold in this offering (meaning a contribution amount of $18.23 per Class A Unit, based on an assumed initial offering price of $19.50 per share (the midpoint of the estimated public offering price range set forth on the cover page of this prospectus), provided that WNFM may reduce such contribution amount, without reducing the number of Class A Units WNFM receives, by the amount of any expenses it pays in connection with this offering (which WNFM estimates will be $8.2 million) for which WNFM is not otherwise reimbursed by Wayne Farms LLC).

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